Archive for the ‘strategy’ Category
Pirates!
21 Apr 2009
by Joel Witmer
A report from the BI Norwegian School of Management has found that those who download music illegally are also 10 times more likely to pay for songs than those who don’t.
So the very people propping up the music industry are those the music industry is targeting for prosecution.
Seeing new things in plain sight
17 Feb 2009
by Andy Schultz
In his book, Moneyball, Michael Lewis explores hidden value in the world of baseball by profiling the methodologies of Oakland General Manager Billy Beane. Spinning off the statistical analyses promoted or inspired by the iconoclastic analyst Bill James, Beane puts together winning baseball teams using no-name players with strong defensive skills and high on-base percentages.
In this week’s New York Times Magazine, Lewis is at it again but this time focusing on the use of the same kind of analysis applied to basketball. The article is a profile of the Houston Rockets’ forward, Shane Battier, who, as his general manager puts it, is “a marginal NBA athlete,” with shooting, assists, rebounding and steals statistics ranking at the bottom of the league.
Yet, he is one of the most high-impact players in the game because of his nearly invisible guarding and defensive skills. When Battier is on the court, he helps his team win by forcing the best players in the game to play their worst games. He plays clean and smart, knowing his opponent’s tendencies and playing them into situations where they shoot poorly. Battier’s prevention of points has the same net effect as if he were putting them on his team’s side of the board.
Traditional evaluation of basketball and baseball players means missing opportunities to look inside the game and draw out extra value and fresh insights from what is really happening. We often miss these plain-sight qualities because we are conditioned to focus on the obvious—home runs, points scored, etc.
You knew it was coming—the analogy to business. How much of our current trouble is the result of stubborn adherence to traditional ways of assigning value? What new measures of the game of business might we use instead to make better decisions and create greater long-term value, growth and stability?
In our custom content business we look not only at revenue and profit but the efficiency of each client. We are bound by the scarce resources of time and a finite team of talented writers, editors, designers, and managers. Looking behind the obvious, we’ve discovered that certain clients, while generating strong revenue, consume a disproportionately high share of resources. At the same time, there are other clients whose consumption of resources is disproportionately lower—the sign of efficiency and desirability, and the opportunity for growth.
Thinking deeply about what is really happening in business means going beyond the obvious. And not only in terms of how one analyzes performance, but how one plays the game. To secure a new client, what unique value can you provide to solve a need and generate a “multiplier effect” of subsequent positive impacts?
Who is the Shane Battier in your organization? Who is overlooked and undervalued because he or she isn’t flashy, and yet without their contributions, the organization would be weaker and less effective? Are you using the right measures to evaluate your human capital?
Everything still comes down to results. Where are the hidden efficiencies and talents in your business that, if understood and cultivated, can help you improve and win?
Game 1: 0-12
15 Jan 2009
by Joel Witmer
The inaugural Imagination indoor soccer team (motto: At Least We’re Better Looking) had its first game this week, an inauspicious 0-12 drubbing at the hands of a team called Mouseknuckles (motto: Even Our Women Are Men).
We’re obviously still working out some kinks.
A primary objective in soccer is to prevent the other team from scoring — we’d heard as much on “blogs” and in “rulebooks”, but throughout the game we remained skeptical and had therefore allowed 12 goals. Unfortunately, as is so often the case, that’s not the full story.
There was talk before the game that once the other team had scored twice all subsequent goals counted against their total. Other theory was based on undeniably powerful anecdotal evidence: when was the last time you saw a soccer game end in a 6-6 tie? We surmised this rule must be why so few professional soccer games ever end with one team scoring more than two goals. When we went into the halftime break trailing 0-7 we were comforted by the fact that we were technically winning 0-(-5).
Of course soccer has another objective: to score goals. Coming out of halftime we hadn’t yet turned our attention to scoring, but that was about to change.
Early in the second half we elected four team officials to hold five separate meetings on whether we needed to reorient our strategy towards scoring goals. For the whole first half of our existence as a team (total length of existence: one half) we had defined ourselves as the smart, innovative team that got by on tricking our opponents into scoring goals at their detriment. Now we were wondering if the soccer landscape was undergoing a fundamental shift right before our eyes. What if the key differentiator we needed to quite literally separate ourselves from our competition was goal scoring? And what consequences would scoring goals could have on our brand identity?
We were in the thick of it now. We needed leadership and sage advice.
Enter: Tad.
In the waning minutes of the game our trusted team captain, Tad, advised us against scoring goals ourselves, out of fear that doing so would be unsportsmanlike and reflect poorly on the company. At the time he seemed to have a point. We were winning 0-(-10). Another goal would be a crippling blow to the morale of the other team. We planned on drinking beers after the game. We didn’t want to be drinking in memory of our vanquished foes. So we opted against scoring and walked off the field with a comfortable 10-goal margin of victory. A successful first effort, we cheerfully told ourselves.
Yet when we looked across the basketball court-cum-soccer field pitch we saw not the sad faces of a team that moments before had suffered a humiliating defeat at the hands of a team wearing orange (much how Estonia looks after facing the Netherlands) but rather the smiling faces, albeit ugly ones (relatively speaking, of course), of a team triumphant in victory. While we were undoubtedly impressed at our opponent’s ability to shrug off defeat we were confused over how exuberantly they were embracing the fact that they had just lost. Winning counts for something, right?
Our bruising enforcer, Michelle “Bow Wow” Bowles, asked the ref to explain the odd behaviour of our opponents. We knew soccer was a foreign game, originating in some country where they speak a funny language, and so we were willing to accept a degree of oddity. Hell, half the reason we were playing in first place was so that we could have a cultural experience. But still, our opponents were freaking us out. Not even the French are this happy after losing.
Turns out we were wrong about pretty much everything. Goals always count for your total and so scoring goals is an unqualified good. And allowing goals is always an unqualified bad. Minor details to some, perhaps, but these facts switched the outcome from a 0-(-10) win to a 0-12 loss.
So we stand 0-1 for the season. But we learned a few valuable lessons about the importance of knowing the rules before you play a game and we’re confident that, after a few more strategy sessions on our goals and objectives, in two weeks, when we play again, we’ll emerge victorious, this time for real.
Can Google Save Newspapers?
8 Jan 2009
by Joel Witmer
Google CEO Eric Schmidt thinks Google is in a position to save newspapers, but not in the way you may think.
I don’t think our purchasing a newspaper would solve the business problems. It would help solidify the ownership structure, but it doesn’t solve the underlying problem in the business. Until we can answer that question we’re in this uncomfortable conversation.
I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I’ve been using is ‘merge without merging.’ The Web allows you to do that, where you can get the Web systems of both organizations fairly well integrated, and you don’t have to do it on exclusive basis.
Say in exchange for allowing Google to run ads on their sites newspapers turn over design, multimedia integration, site architecture, etc., to Google. The newspapers would make more money by being able to offer a better product (not to mention having the resources of Google at their disposal) while Google could expand their business into the news industry in a way that’s financially fruitful (unlike Google News, which is not making them money). And users will have better access to news.
Failing Newspapers
23 Dec 2008
by Joel Witmer
The profit margins on gas at gas stations is incredibly slim. For every gallon of gas sold station owners make a few cents. This is why the vast majority of gas stations include convenience stores. Station owners make much more money selling lotto tickets, coffee, and snacks than they do through selling gas. Gas stations have never been in the business of selling gas. That was just the hook to get you into their stores.
Similarly, newspapers have never really been in the business of selling news. The saleable goods in newspapers are not the articles but the advertisements. Newspapers are just another vehicle for delivering ad content. This is as true today as it was 100 years ago. This has always been the busines model.
So what happened on the way from print to digital that prevented newspaper owners and publishers from recognizing sooner what sort of business they were in? To be more specific, why did newspapers let some guy named Craig corner the market on classified ads?
Just a thought.
HDYC? Bonus Edition
9 Dec 2008
by Joel Witmer
The Wall Street Journal reported on Monday that Merrill Lynch CEO John Thain has suggested to directors that he receive a 2008 bonus of as much as $10 million. This despite the fact that his company lost more than $10 billion dollars this year and was sold to Bank of America. His rationale: Were he not in charge the company would have lost more money and that the company lost money should not be attributed to him so much as attributed to the economic collapse of the financial sector.
The New Yorker economic columnist James Surowiecki thinks Thain earned his bonus:
Unlike the executives at Lehman and Bear, Thain recognized Merrill’s vulnerability and its need for a deep-pocketed parent. He didn’t get wrapped in delusions about “weathering the crisis” or spend too much time fretting over the loss of Merrill’s independence. Instead, he played the hand he’d been dealt, and, as it turned out, played it very well. It’s obviously bad form at this point to say anything good about Wall Street executives, but if preserving shareholder value is still a criterion for evaluating executive performance, there’s little doubt that Thain did a bonus-worthy job.
CAP blogger Matthew Yglesias questions the logic behind these bonuses:
You learn in the downturn that the business community believes that the profits and losses of major firms has a lot to do with the general economic climate, and relatively little to do with the particular decisions of particular executives. You hear about things like “the general collapse of the market.” But these concepts seem to go mysteriously missing during boom times. But it can’t be both ways. Either executives should benefit when their company prospers and suffer when it doesn’t, or else variation should be sharply curtailed in either direction. The currently prevailing rule is “double-super-duper bonuses when things go up, and large bonuses when things go down.” It’s a stupid system.
In an unrelated note GM — one of those other bailout darlings — had a $3 billion ad budget this year. Compared to this a $10 million bonus going towards keeping a competent CEO at your company seems like a steal, doesn’t it?
Tech Czar
14 Nov 2008
by Joel Witmer
Our federal government embraces the 21st century with a rumored Cabinet-level position for a Chief Technology Officer.
Coincidentally, Imagination is also looking to hire a Director of Technology. As a magnanemous gesture of good will, we’ll gladly forward any unhired resumes to the appropriate authorites in Washington.
